Money and Finance
From Common Stocks and Uncommon Profits:
- More From Phil Fisher On Diversification
From Common Stocks and Uncommon Profits and Other Writings: Usually a very long list of securities is not a sign of the brilliant investor, but of one who is unsure of himself. If the investor owns stock in so many companies that he cannot keep in touch...
- More Thoughts From Phil Fisher On Selling A Great (and Growing) Business...
From Common Stocks and Uncommon Profits:There is still one other argument investors sometimes use to separate themselves from the profits they would otherwise make. This one is the most ridiculous of all. It is that the stock they own has had a huge...
- Daily Journal Holdings
10-K comments for the year ended September 30, 2012:In February 2009, the Company purchased shares of common stock of two Fortune 200 companies and certain bonds of a third, and during the second and the third quarters of fiscal 2011, the Company bought...
- Whitman, Diz Quotes
From the book Modern Security Analysis: Understanding Wall Street Fundamentals (which you can also view, though not download for free, HERE):The analyst relying on earnings to evaluate a business or a common stock will be helped if he has some appreciation...
- Recent Dividend Increases
Dividend investors would be wise to focus not just on a stock's current yield, but also on the long-term growth potential of its dividends. That's because strong businesses that consistently raise their dividend payouts reward shareholders with...
Money and Finance
Phil Fisher on financing growth
From Common Stocks and Uncommon Profits:
Therefore, if investment is limited to outstanding situations, what really matters is whether the company's cash plus further borrowing ability is sufficient to take care of the capital needed to exploit the prospects of the next several years. If it is, and if the company is willing to borrow to the limit of prudence, the common stock investor need have no concern as to the more distant future. If the investor has properly appraised the situation, any equity financing that might be done some years ahead will be at prices so much higher than present levels that he need not be concerned. This is because the near-term financing will have produced enough increase in earnings, by the time still further financing is needed some years hence, to have brought the stock to a substantially higher price level.
If this borrowing power is not now sufficient, however, equity financing becomes necessary. In this case, the attractiveness of the investment depends on careful calculations as to how much the dilution resulting from the greater number of shares to be outstanding will cut into the benefits to the present common stockholder that will result from the increased earnings this financing makes possible. This equity dilution is just as mathematically calculable when the dilution occurs through the issuance of senior securities with conversion features as when it occurs through the issuance of straight common stock. This is because such conversion features are usually exercisable at some moderate level above the market price at the time of issuance—usually from 10 to 20 per cent. Since the investor should never be interested in small gains of 10 to 20 per cent, but rather in gains which over a period of years will be closer to ten or a hundred times this amount, the conversion price can usually be ignored and the dilution calculated upon the basis of complete conversion of the new senior issue. In other words, it is well to consider that all senior convertible issues have been converted and that all warrants, options, etc., have been exercised when calculating the real number of common shares outstanding.
If equity financing will be occurring within several years of the time of common stock purchase, and if this equity financing will leave common stockholders with only a small increase in subsequent per-share earnings, only one conclusion is justifiable. This is that the company has a management with sufficiently poor financial judgment to make the common stock undesirable for worthwhile investment.
- More From Phil Fisher On Diversification
From Common Stocks and Uncommon Profits and Other Writings: Usually a very long list of securities is not a sign of the brilliant investor, but of one who is unsure of himself. If the investor owns stock in so many companies that he cannot keep in touch...
- More Thoughts From Phil Fisher On Selling A Great (and Growing) Business...
From Common Stocks and Uncommon Profits:There is still one other argument investors sometimes use to separate themselves from the profits they would otherwise make. This one is the most ridiculous of all. It is that the stock they own has had a huge...
- Daily Journal Holdings
10-K comments for the year ended September 30, 2012:In February 2009, the Company purchased shares of common stock of two Fortune 200 companies and certain bonds of a third, and during the second and the third quarters of fiscal 2011, the Company bought...
- Whitman, Diz Quotes
From the book Modern Security Analysis: Understanding Wall Street Fundamentals (which you can also view, though not download for free, HERE):The analyst relying on earnings to evaluate a business or a common stock will be helped if he has some appreciation...
- Recent Dividend Increases
Dividend investors would be wise to focus not just on a stock's current yield, but also on the long-term growth potential of its dividends. That's because strong businesses that consistently raise their dividend payouts reward shareholders with...